The Bitcoin market is showing a frightening similarity to the structure of the 2022 bear cycle. The July bounce, which many took as a lifeline, will most likely be followed by a sharp reversal downward and a final wave of capitulation. The current recovery is possibly the biggest bull trap of the entire cycle.
Fractal Deja Vu: 2022 Repeating Itself
The price dynamics almost mirror events from two years ago. First, we saw the formation of a June bottom, followed by a bounce that retail investors perceived as a buy signal. Now, Bitcoin is again testing the 200-day moving average, retail is actively opening long positions, and euphoria is building. However, in my assessment, this rally will be followed by a decisive decline.
The fractal similarity deserves special attention: the June bottom, a false recovery, RSI divergence, and a final downward push before the real reversal. In 2022, after the June low, Bitcoin lost another approximately 28% in November-December. If the pattern repeats, we are facing a final crash with the liquidation of long positions, after which a reversal will only begin in the third or fourth quarter.
My current tactic is extremely simple: I am in a long position with a target of $67,000-$70,000, where I believe the market will gather liquidity for a subsequent short. The key level is $65,000. If it fails to consolidate above, I will exit the long earlier and start accumulating short positions, without waiting for $67,000.
Arguments for a New Bottom: Metrics Indicate a Turning Point
Data from CryptoQuant confirms my hypothesis. The Spent Output Profit Ratio (SOPR) has fallen to a 20-month low of -0.35. This level has not been seen since December 2022, when Bitcoin dropped below $16,000 after the FTX collapse. Historically, this indicator has identified market bottoms with high accuracy: a similar picture occurred in 2015 and 2019, followed by a sustained reversal.
Furthermore, Bitcoin is trading only 16% above its realized price. Historically, at such proximity to this zone, the average return was 41% after six months and 81% after a year. However, in the current macroeconomic context and against the backdrop of structural similarity to 2022, I am inclined to believe that we will first see a final capitulation, and only then the long-awaited reversal.
My professional opinion: The market is overheated with expectations, and fundamental metrics indicate the need for one more wave of cleansing. Investors should be extremely cautious: the current bounce could turn out to be a classic bull trap, followed by a deep decline before a new bull cycle begins.